Monthly Archives: May 2014

Punjab National bank’s PNB Housing Finance Ltd is now focusing on affordable housing finance, for which it has obtained RBI approval of $ 100 million External Commercial borrowings (ECB). Further, there is a plan to raise another $ 50 million, by way of loan from International Finance Corporation, for which there is a backing of a private equity fund – New Silk Route.

The fund will enable PNB to work on affordable housing segments in low income states, women borrowers and to finance mortgages for green residential units. Though PNB HFL was earlier dependent on the banks’ borrowings and NCDs for its funds, the new method of raising funds is part of the growth strategy for PNB HFL, experts at Ikia consulting services feel.

The low and middle income client would be benefitted with the housing finance offered as they would prefer investments in the lowest risk classes in the financial sector. One advantage that experts at Ikia consulting services foresee is the job creation on this front and integration of Tier 2 and tier 3 cities resulting in increased access to financial services, which results in growth of the economy.

The announcement of the lok sabha elections has influenced the pace of property sales in the state. Another reason for the lull as quoted by realtors is the rising prices and investors must be waiting to see the outcome of the elections to decide on their purchases.

The higher prices quoted for property has a lot to do with the decrease in sales. Affordability is another major factor influencing the decision to buy property. Prices have shot up due to factors like labor costs, taxes etc.

Experts at the Ikia consulting services, tax advisory, are of the opinion that the government should consider giving a tax concession to first time home buyers. In cities where infrastructures like the roads are good, the development of property is spread out evenly. Another concern that came up due to the announcement of elections is that the labor force has fallen short as they have gone back home to vote.

During elections builders and developers do not focus on launching new projects but focus on selling existing inventory. This is to raise money for elections and at times they do sell at prices below market rates. Hence end user may get what they are looking for from resale or secondary markets at bargain prices. Builders may also offer substantial discounts/freebies during this time to benefit the buyers.

Home for all is an ambitious but do able project, that is part of the election manifesto of the BJP Government and the private sector builders and consultants has been readying their prints on affordable housing. The government has promised housing for all by 2022, and is looking at residential units costing between 10-30 lakhs under this scheme. But the companies have moved over to mid-level and luxury category of housing quoting and looking at better profit margins. The government quotes a shortage of 18.78 million homes for the low income and economically backward groups. The Ministry of Urban Development and the Jawaharlal Nehru Urban Renewal Mission are working on making India’s cities more livable and becoming centres of economic growth and inclusion. In short, urbanization and home for all has to go hand in hand with each other. Lalit Jain, president of Credai, an association representing pan-India builders is of the opinion that once the goal of home for all is met real estate will make for 30% of the country’s GDP and builders are encouraged to look at international models to where affordable housing has been a success. Companies like Tata Housing and Santorini are already in the fore front offering low cost, affordable houses across major cities in the country. Our experts at Ikia consulting services also feel the need to allow insurance and pension funds to invest in affordable housing sector. They suggested that rationalization of direct and indirect taxes would enable competitive pricing for the end user.

≈ Comments Off on Chennai among top 12 destinations for realty investment

Chennai is acknowledged as an English speaking work zone and qualifies as a traditional BFSI (Banking Financial Services and Insurance) domain and has tremendous strengths as a city which gives importance to quality health care and education system. This is had brought global recognition to this city and Chennai is now among the top 12 cities that attract real estate investment due to these factors.

Savills World Research and Deutsche Asset & Wealth Management say that Chennai is one amongst the 12 cities in the world that shows potential for high real estate investment yields. The Investment prices are lesser these cities are more attractive and developing economies such as Jakarta and Chennai, have a high number of ultra-high-net-worth residents, it said.

Portfolio management experts at Ikia Consulting Services who has analyzed the potential for investments in Chennai say that the city offers opportunity for high capital growth on investments made. Real estate values which ride the fortune wheel in many cities is looking at contributing towards economic strength. The IRR (Internal Rate of Return) trend is 20% for residential projects and 10% for commercial projects in the city; while rental give a 5% returns.